Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Finance Committee
HB 1512
Brief Description: Concerning lodging-related assessments under chapter 35.87A RCW.
Sponsors: Representative Ryu.
Brief Summary of Bill

 

  • Authorizes lodging businesses to collect parking and business improvement area (PBIA) special assessments as an agent for the PBIA from guests as a separately stated per night charge.
  • Provides that special assessment amounts collected by a lodging business on behalf of a PBIA are not subject to the sales and use or business and occupation taxes.

 
Hearing Date: 2/16/21
Staff: Nick Tucker (786-7383).
Background:

Parking and Business Improvement Areas.
Cities and counties are authorized to establish parking and business improvement areas (PBIAs) by ordinance.  A PBIA is an area within a county, city, or town that has the authority to levy special assessments on the businesses and multifamily residential or mixed-use projects within the area that are specially benefited by the activities of the PBIA.  Parking and business improvement area special assessments are imposed on the business or residential operator and are generally collected annually.


Revenues raised from the special assessments of a PBIA must be used to finance:  (1) acquisition, construction, or maintenance of parking facilities; (2) decoration of a public place; sponsorship or promotion of public events; (3) furnishing of music; (4) professional management, planning, and promotion for the area; (5) maintenance and security for common, public areas; or (6) transportation services for the benefit of the area.


Business & Occupation Tax.
Washington's major business tax is the business and occupation (B&O) tax.  The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business.  Businesses must pay the B&O tax even though they may not have any profits or may be operating at a loss.


Retail Sales and Use Tax.
Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services.  If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use tax applies to the value of property, digital product, or service when used in this state.  The state, all counties, and all cities levy retail sales and use taxes.
Summary of Bill:

A lodging business may collect any PBIA special assessment from its guests in the form of a separately stated charge per night on the sale lodging.  In collecting a special assessment in this manner, a lodging business is deemed to be collecting the assessment as agent of the PBIA and such amounts are not subject to the sales and use or B&O taxes.

 

A lodging business is a business that furnishes lodging, where the sale of such lodging is subject to the sales and use tax.
Appropriation: None.
Fiscal Note: Requested on February 8, 2021.
Effective Date: The bill contains an emergency clause and takes effect immediately.